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One terse phone call Monday afternoon spelled the end of a chance to conclude the corrosive proxy battle between fertilizer maker Agrium Inc. and its biggest shareholder, U.S. hedge fund Jana Partners.

A truce could have terminated the investor’s bid to take a seat at the boardroom table of Calgary-based Agrium and push for a split of the company it believes is underperforming.

Instead, shareholders at a May meeting will be presented with two competing board slates and two competing visions for the company. Agrium is pushing for the status quo, an integrated producer of fertilizer and retailer of farm products. Jana says management can be improved, and the company might be better off dividing into two companies, one a producer and one a retailer.

Starting last Friday, with an e-mail to Jana from a representative of Agrium, the sides opened up a quiet diplomatic effort to try to end the time-consuming and expensive dispute, which has been heating up since last summer. On the table was the possibility of Jana nominating a director to Agrium’s board.

But by Monday night, after a call between Jana founder Barry Rosenstein and Agrium CEO Michael Wilson, the truce was over. Agrium went ahead with the nomination of two new directors that Jana refused to endorse, including former Viterra Inc. CEO Mayo Schmidt. There was no director for Jana. What’s more, the sides were publicly sniping at each other once again, with Agrium accusing Jana of reneging on a deal and Jana saying they were “false allegations.”

The back and forth of the talks in the 72 hours from Agrium’s first missive to the final confrontation, in the form of dozens of calls and e-mails that were described in detail by three people familiar with the negotiations, provides a window into the psychology of the dispute and how each side views its negotiating position.

Believing it was in a position of strength, and betting that Jana would be willing to give in to avoid a vote, Agrium’s opening offer was a hard bargain.

From Agrium’s point of view, “this was not a settlement negotiation,” said one of the people. It was a take-it-or-leave-it offer that would enable Jana to save some face before a vote that Agrium was confident it would win.

The company wanted Jana to essentially drop all its criticisms of Agrium, and agree to stop agitating for a full year, in return for a single seat on the board. That would be a big step down from the five seats that Jana had been seeking.